Wall Road down as retailers stoke inflation fears By Reuters

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© Reuters. FILE PHOTO: People are seen on Wall Street in front of the New York Stock Exchange (NYSE) in New York City, the United States, March 19, 2021. REUTERS / Brendan McDermid / File Photo

By David French and Ambar Warrick

NEW YORK (Reuters) – Wall Street benchmarks closed Wednesday amid inflation fears and supply chain concerns, with investors betting that the Federal Reserve will hike interest rates earlier than expected to curb rising prices.

target Corp (NYSE 🙂 was the last major retailer to report positive results, raised its forecast for the year and beat profit expectations, citing an early start to Christmas shopping.

But the company’s shares fell, and saw its peer Walmart (NYSE 🙂 decline on Tuesday, as both retailers slumped margins in the third quarter on supply chain issues.

Other retailers not yet to report profits traded lower, including Macy’s Inc (NYSE 🙂 and Kohls Corp before the numbers were released Thursday morning, as well as Gap Inc (NYSE 🙂 and Urban Outfitters Inc (NASDAQ :), which due next week.

Some traders bucked the trend. TJX Companies Inc (NYSE 🙂 hit an intraday all-time high after the owner of TJ Maxx announced above-estimate earnings, an increase in its share buyback program, and a good position to meet Christmas demand.

Lowe’s (NYSE 🙂 Cos Inc rose after the home improvement chain raised its full-year revenue forecast due to higher demand from builders and contractors and a strong US housing market. peer Home depot (NYSE 🙂 also reported strong results on Tuesday.

The Dow was also weighed by Visa Inc (NYSE :), which slumped after Amazon.com Inc (NASDAQ 🙂 announced that it would no longer accept cards issued by the operator in the UK due to high transaction fees.

While strong retail data this week showed that spike in inflation has so far not curbed economic growth, investors feared that further price hikes could hurt growth and force the Federal Reserve to tighten monetary policy prematurely.

“Inflation is at a 31-year high, but we have the lowest interest rates we’ve ever had, so these things just don’t go together,” said Salem Abraham, portfolio manager for the Abraham Fortress Fund.

He added that while supply chain problems would be resolved if COVID passed into endemic status, the huge surge in money supply would ensure inflation would remain a serious problem for years to come.

The contradicting comments of Fed Presidents James Bullard and Mary Daly on Tuesday also created more uncertainty in the markets.

“The Fed will hold for as long as it can … But if (inflation) continues to rise and you continue to see inflationary pressures, the question is how many and how often (rates) will rise,” said Joe Saluzzi , Co-manager of trading at Themis Trading in Chatham, New Jersey.

Strong retail profits this week will round out an optimistic third quarter earnings season that had pushed Wall Street indices to record highs.

Investors waited for Nvidia (NASDAQ 🙂 Corp’s third quarter results to mature after the bell. Shares in the chip maker and the broader Philadelphia semiconductor index fell on Wednesday but stayed just below record highs.

According to preliminary data, the S&P 500 lost 11.78 points, or 0.25%, to end at 4,689.12 points, while the Nasdaq Composite lost 50.81 points, or 0.32%, to 15,923.04. The Dow Jones Industrial Average fell 208.07 points, or 0.58%, to 35,934.15.

Tesla (NASDAQ 🙂 gained, while peer company Canoo gained on Wall Street’s growing demand for EV shares.

But Rivian Automotive Inc collapsed as investors took gains from a streak of earnings of nearly 71% since the stock was listed last week.

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